Everyone posts this video about Mushihimesama Futari, but it's obvious no one understands it.
Yes, the hitbox is very small. In addition, a good 95% of those shots have no chance of hitting you. They just spread across the whole screen to freak people out and look intense, but it won't phase hardcore players. You just need to focus on the hitbox and your immediate area instead of the whole screen, it's something I call the "shooter's eye" and once you get the hang of it, it's very easy to see lines and which areas are dangerous.
In addition, that battle is the game's true last boss, which requires you to beat the entire game without continuing on the hardest difficulty, plus beat it a second time with increased difficulty in order to reach the boss. If you're good enough to actually reach that fight, you're probably good enough to stand a chance of winning. It's no different from insane bosses in RPGs or whatever. Think about Ninja Gaiden 2's final battle on the hardest difficulty level, it's probably really difficult, but if you reach it then you know what you're doing.
There's also much more to this game than the true last boss fight, overall it's a very solid shooter.